it's an amazing thing when you show generosity of spirit to someone. and you want people to be saved and to have a better life, then you don't stop. the idea that we have saved five million people's lives, it's overwhelming. it's everything. >> the morning.

this is "bloomberg daybreak: europe." the aussie dollar extends losses after a surprise hold by the rba. the bank warrants further tightening may be required. still struggling, china's factory output contracts in july while home sales dropped the most in a year as beijing pledges to boost debit credit. plus, another $2 billion in buybacks for hsbc shareholders as the bank's second-quarter pretax profits needs estimates. we will bring you our introverted >> >> -- interview with noel quinn. those results are a function of good revenue results across the globe. all global businesses have strong revenue growth. all product lines within those businesses, strong revenue growth. lizzy: you can see hsbc shares jumping just over 1% in hong kong. as the traders get back to their desks after lunchtime break. good morning and welcome to

august. looking back over the past 29 years, the vix has shown the august is typically the most volatile month when the dollar is stronger and global stocks are weaker. it is the second strongest month for global bonds but is this going to be a typical august? wall street ended july on a high and s&p closed yesterday at a 16 month high. in fact, when the biggest estimates of the year, morgan stanley's michael wilson changed his tune and sees the rally law lasting -- the rally lasting longer. u.s. futures flat pointing to a slightly higher opening. if you look at treasuries, 10 year yield traded near 3.95%. we've got more data out today. if it comes in strong, that could be the next kicker higher for yields. let's check in now with tonya chan for how asian markets are faring. what is happening where you are after the rba decision? >> there is a bit of volatility

over here as well. let's start with australia as a whole from the reserve bank of australia. there cash rate at .1%. post the statement, governor loaded say that might look at -- governor low so they might look at tightening and conditions around the world and economy and high school -- household spending. economists were split going into this decision and markets were pricing it at a hold third the majority of economists were seeing a small hike. you can see it in the aussie dollar today. earlier in the session they were holding onto gains but now it is falling against the dollar. ozzie stocks are still extending their gains and on the front end of the yields. the yield of the lowest since early june. i'm going to turn out to china. they have been a swash of disappointing weak economic data. caixincaixin the manufacturing

pmi data coming in missing estimates. it is in contractionary territory now. you have tumbling home sales last month and negative news. country garden is reconsidering equity sale. a lot of indications of how dire things are the property market right now and it is more blows to the china equity bulls. hong kong shares are paring earlier gains today as well. lizzy: thanks to bloomberg's tanie chen. i want to get to the rba decision. i am joined by valerie tytel and garfield reynolds. let's start with the because australia's central bank has kept his interest rate unchanged following the cooling of inflation pressures and weaker household bending. the rba did keep the door open to future hikes. garfield, take us through this decision because markets and economists have been split in expectations on the weight in. garfield: yeah, they have and

has been a difficult time trying to read the rba. australia's data like a lot of data around the world has been quite occult. we have -- quite difficult. we had what we thought would have been a signal that the rba could afford to hold which was a marked slowdown in the inflation shown in the quarterly cpi report. that is the one the rba basis its forecast on. you would think that is a good basis for it, however we had very strong labor market data and also had indications within the cpi data that services inflation is still high. that was why this was not a clear call. this also, some thought that with phil lowe soon to step down as rba governor that he would be eager to carry out any hikes that are going to happen on his watch so his successor won't

need to. that is something that economists talk about. so far has not played a role. looking at what rba actually said, they still, as you said, they still sound board towards the side of we will hike at some stage. but they drew back from that and markets like to go with the flow. they are saying if things keep going with that trend, the rba has probably done enough neared certainly there is a chance it has done enough. markets are now seeing a line ball call slightly favoring a rate hike again at some stage but a decent probability that this is it for the rba. lizzy: valerie what are you noticing in terms of the changes the language in the forward guidance from last month? valerie: it is all about the fact that they maintained the first statement to the last paragraph, saying that some

further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe. that is the key statement was kept in the opening statement from the rba, which really is going to go against what their neighbor new zealand has done, which caused an signaled it was the end. the rba holding here but really not giving any guidance the market that this could be the end for them. lizzy: garfield, give us your reading of the market reaction so far. the rba leaving the door open, as you say. garfield: the market partly because economists at the other would be hike also because there was the potential that the rba would do what the fed has done at times and hold what signal more strongly that more hikes are coming, it has gone with the flow but bonds have rallied. the currency has volunteered stocks have rallied but the

moves for the moment fairly contain. we have got about eight basis points off the three and 10 year yield. that is not the sort of 10 basis point plus move you would get if the market was saying ok, that is it, we know it's over. some of the investors i've been speaking to are still wary about diving into the markets because they are not convinced this is mission accomplished. lizzy: thanks to bloomberg's mliv strategists garfield reynolds there. valerie, you are going to stay with me because i want to turn to china now. we have the latest caixin data earlier and chinese manufacture contracting in july and that is rippling through factors across asia signaling turnaround in the region could be far off. the manufacturing pmi the private survey has declined to a six-month low in is below the level that separates contraction from expansion. overnight we had the announcement from china state

house urging cities to roll out more property market was due measures we keep getting this trip feed d --rip feed of stimulus and never a bazooka. at what point do we get to critical mass investors? valerie: the data overnight was really important. the caixin pmi differs from the official pmi in that it reflects the smaller export driven firms. they are expressing issues of foreign demand. the export driven economy which really helped china during the pandemic is really losing steam. we have seen data points after data point reflecting this narrative. we have not gotten any big stimulus from china, and there's a lot of speculation that no bazooka is coming. they do want to change the economy. they want to alter it from an export driven economy to more of an intern -- internal consumer led economy. lizzy: let's turn to the fed

because we had more data out of the u.s.. the fed said that banks reported tighter credit standards and ongoing weak demand for loans both in businesses and consumers. this is for the last quarter. the sloos, senior loan officer opinion survey showed that proportionally the proportion that is tight in terms of commercial and rose to 50 -- 50.8% in the first quarter. that lines up with what jay powell was saying. where does that leave the soft landing narrative now? valerie: it does line up with what powell told us in the q&a. with regards to a soft landing, there are some out there who see the tightening credit conditions are going to lead eventually to a sharp drop in lending. when that happens, that is when the recession said in. that is what bloomberg economics things is going to happen at the end of this year or maybe the first quarter of 2024 that we get a big drop in lending

because of tightening credit conditions. this is a really great survey that the fed does. it is a quarterly survey. the fed watches that closely and it leaves actual lending activity. if you look at what happened during 2007, 2008, the survey was one of the first that flagged that there was some trouble in lending market with the onset of december 2007. it is a leading indicator. it is just a matter of how big of a sharp drop in lending is it implying going forward and will that cause a recession? we have had so much optimism when it comes to the u.s. economy, people dropping the recession calls. it remains a question of what this impact will be on the economy and when we will see it. lizzy: i know you love data so if you say it is great data, it has to be. i want to look for other developments we are watching out for today. at 7:00 a.m. london time, another insight into how the u.k. housing market has been performing to the nationwide house price survey. we saw mortgage approvals rising

unexpected the yesterday in the make a big the numbers, the highest since october. -- in the bank of england numbers. the consensus is deeper dropped into negative territory because weight -- rate hikes are weighing on housing market. the bank of england has said only a third of rate hikes have passed through. at 3:00 p.m. we get chicago fed president austan goolsbee speaking again. yesterday he said data is showing sewer u.s. inflation which is fabulous news but he has not made up his mind yet whether that warrants a pause at the fed's next meeting. maybe the data at 3:00 p.m. will help him. you're going to get u.s. jolts data and ism manufacturing numbers. our economists reckon you will see excess labor demand continuing to decline in june and manufacturing rebounding in july. val, talk us to how that data will lead into the fed thinking. valerie: the ism will be important, the manufacturing components. the pmi's already showed a

surprise strengths and manufacturing. the market is going to be looking very closely at the ism numbers. i was surprised that goolsby yesterday said that consensus is still out on whether he is going to vote rate hike at the next meeting because he is known as the head of the dove camp lael brainard left. perhaps a rebound in the strong data could tilt the dogs more towards a september hike -- tort the dogs more towards a september hike. we get ism services later in the week ahead of payrolls so it is a big week for u.s. data. i want to note, strong u.s. data that lives treasury yields that can put pressure on jgb's, we have not seen a selloff today in the jgb market for that could light a fire under the jgb markets. lizzy: we will keep an eye on the head of the doves later at 3:00 p.m.. thanks to valerie tytel. you can get a roundup of your stories in today's addition of

daybreak. the lead on hsbc and they bring you the latest rba decision and finally the china data. terminal subscribers can find the news lover -- newsletter on the terminal by going to dayb. shares are extending gains after peering second-quarter earnings with topline growth and net interest margin estimates were hsbc. the lender which generates most income and asia also announced another buyback of up to $2 billion. it saw pretax profits hitting $8.8 billion. we spoke to the hsbc ceo noel quinn. noel: we see great opportunity stilts in china, here in hong kong but also we see opportunities within india and the poor. singapore not just for singapore alone but for singapore and its gateway intoasean. we are investing equally into all parts of asia and seeing the performance across the whole of

asia. but also we are investing in new business lines for us. in the past we have under invested in our wealth business across asia. we had a very good business here in hong kong. we invested in that's. we do not invest enough mainland china or singapore or india. we are correcting that now. you can see the evidence of that in these results. in asia, we took an $27 billion in net new invested assets on behalf of our clients. if you look globally, to the last 12 months, we took an $75 million in net new invested assets to our wealth business. that is a function of the investment program was started over two years ago. francine: how active are you in helping to finance the belt and road objects? -- projects. noel: we look at all those projects taking place, all the big infra structure projects. we are focused on the per structure projects around sustainability at the moment.

new hydrogen plants, new wind and solar, ways to decarbonize. we are working with our clients across all of asia but globally. we have done some big transactions as well in the middle east where we are looking to help clients invest in the new technology to build the new greener economy of the future. we look at the amount project by project basis and some of them are within the silk road, the belt and road initiative but some will be outside of that. many of them will be outside. lizzy: that was hsbc ceo noel quinn there on growth in asia following their second-quarter earnings beat. coming up, the rba holds but warrants further tightening monetary policy may be required. plenty more to discuss. later on this hour, we will speak to dhl group dfo melanie after they reported event for the second quarter that beat estimates and they raised the lower end of the will and ebit

guidance range. that is that 6:40 a.m. u.k. time. this is bloomberg. ♪

lizzy: welcome back to "bloomberg daybreak: europe." australia's central bank has cut its key interest rate change following the cooling of inflation pressures and weaker household spending. but the rba to keep the door open to future hikes joining me now is bloomberg mliv strategist mark cranfield. he will break down that decision. mark, what does it mean for other g10 control banks? -- central banks? mark: it is another piece in the puzzle that shows that we are getting used the idea that degrades are either very close -- peak rates are close or have

happened across the g10 world. the rba today put themselves in a position where effectively the bar for them to raise rates now is extreme the high. although they did talk about the fact that they may need to raise interest rates again, they have use that word many times already. from the traders point of view, what has changed in the past couple of months is that traders have got into this idea that they can see inflation in most part of the world coming down including australia and they can see the central banks who have done a lot of work and are talking about the risks ahead such as the rba today talking about unemployment is likely to go much higher next year as well. if you put that into the big picture, there is -- traders need to see new language that comes from a hawkish direction if you want them to take it seriously. that was not the case with rba today. there was nothing in there that was a warning signal to traders that we are serious that the

risk of an of the rate increase is coming down the road. that was not the message they are hearing today. what they heard is a central break that probably discussed -- central bank that sounded relatively dovish because they did not use any new phrases which give out a warning signal. from here, traders will probably take it as a signal that fixed income is a good place to be, equities are probably a good place to be but not so much the aussie dollar because it is already starting to show signs of weakness on a relative basis. it will probably start to underperform against the rest of the g10 crowd. lizzy: i want to pivot to japan because i love your peace, jgb's have not seen as much interest for decades. let's talk dollar-yen. has moved so high after the boj's week. why? mark: you have the japanese bond world which is focused on the 1% threshold that the bank of japan has set in than the currency.

the yen is very focused on the short-term rates were nothing has happened. there has been no change really the difference between short-term u.s. tolerates and yen rates. if you look with a magnifying glass you will see that u.s. short-term rates are fractionally higher than yen rates over the past few days. that is a negative for the currency. the reason why dollar-yen is mostly higher is the foreign exchange rate care smarts about very short-term rates where they can get short-term funding. for the moment, they are being paid attractively to hold u.s. dollars. the differential there is at least 400 basis points, pretty good. all you need is the currency to stay stable and you have earned your 400 points. if you get a rise in the dollar, that is even better. at the long end of the curve, the story is somewhat different. currency traders not so focused that far out. they care about things happening in the next 30 minutes or one hour. they don't really care about the next 10 years. ethics traders -- fx traders,

dollar-yen are looking at what is happening with the dollar. lizzy: here in the u.k., shop prices fell for the first time in two years according to the latest british retail consortium figures. what does that mean for the bank of england decision thursday? surely they are more bothered about services and core inflation. mark: the bank of england has a long list of things to worry about and that is just one of them. as they look for the details of that report, they might find encouragement and that the supermarkets also are planning on further food price reductions in the u.k.. that could be through quickly. clearly, there is a term going on and inflation is way too high in the u.k.. the bank of england is well aware but the turning point can be quite fast. there are signs that things are already going in the right direction. when you take into context the global picture, it's going to be quite tough for the bank of

england to set a hawkish story when the rest of the world is looking at flat rates and possibly even rates starting to edge a bit lower before the end of the year. in that context, the bank of england will probably raise 25 basis points this week but it will be very difficult for them to know a hawkish story when they see -- difficult for them to sell a hawkish story when things are turning in the right direction. lizzy: food price inflation is crucial for the poorest britain's in society, so it will help the political narrative. thanks to bloomberg's mliv strategist, mark cranfield. coming up, the owner of birkenstock is planning an ipo. we will bring you more details next. this is bloomberg. ♪

lizzy: welcome back.

bloomberg has learned that the owner of birkenstock is planning an ipo as soon as september. sources tell us that the listing by -- could value the iconic german single maker and more than a billion dollars. bloomberg reported that the private equity firm was backed by lvmh and working with goldman sachs and jp morgan on the potential share offer. bloomberg has learned that exxon is in talks with major automakers about supplying lithium needed for electric vehicle batteries. our sources say that the companies involved include tesla, ford, and volkswagen. it is also having discussions with samsung and sk. i went to give us a look ahead to some important earnings at the top of the hour from bp. wrapping up a difficult quarter for big oil. of course, we have disappointing results from shell last week and

firms from exxon to hotel have seen lower margins. a particular interest will be at bp's third-quarter buyback projections and that could turn out to be more modest because of declining surplus free cash flow. that is a warning from bloomberg intelligence. the shares have barely moved your to date but we will be bringing you an interview with the ceo at 7:30 a.m. london time in our markets today program. coming up, we will bring an interview with hsbc ceo noel quinn as the bank announces another $2 billion in buybacks. that is next.

lizzy: good morning.

this is bloomberg daybreak: europe. these are the stories you're waking up to. the aussie dollar and bond yields declined after the rba holds rates for a second straight month. the central bank warrants further tightening may be required. china's factory output unexpectedly contracts in july while home sales drop the most in a year. beijing pledges to boost iva credit. -- private credit. the bank's second-quarter pretax profits beats estimates. we will bring you our interview with ceo noel quinn. >> those results are a result of strong revenue growth. all the product lines within the businesses, strong revenue growth. lizzy: if we take a quick look at how hsbc shares are doing in hong kong after the lunchtime break, they are extending gains, currently up 1.8% almost.

we will bring you more of that interview shortly. well, it's august. i've just been looking back over the past 29 years. the vix shows august is typically the most volatile month. it's when the dollar is stronger, global stocks are weaker, and it is the second strongest month for global bonds. but will this be a typical august? wall street ended july on a high, the s&p closing yesterday on a 16 month high. even one of the biggest pessimists of the year, michael wilson, now sees the rally lasting longer. so maybe this august will be different. treasuries, 10 year yield traded near 3.95%. more u.s. eco-data out today. if it comes in strong, that could be the next kicker higher for yields. but let's get back to the rba story because australia's central bank has kept its key interest rates unchanged

following a cooling of inflation pressures and weaker household spending. but the rbi has kept the door open to future hikes. see how asian markets are faring with tania chen. what is happening where you are? tania: yes, that reserve bank of australia decision making one hour ago and it is a hold with a cash rate of 4.1%. the second straight month they have held it. markets seem to be pricing as a dovish hold pre-there is a caveat they are looking to see if there might be potential conditions in which they would have to raise rates again. they would be looking at conditions around inflation and household spending. going into this, markets were pricing in two different directions. traders were pricing in a hold, but the majority of economists saw a small hike. you can see this dovish hold sentiment is taking hold in the aussie dollar.

earlier any session it had been gaining but now it is firmly down about .7%. the front end of the aussie yields the three-year fell around four basis points, closest to the lowest level since last month. turning to china quickly, they have also been getting a lot of disappointing economic data. they had caixin pmi numbers missed estimates. that is a private survey at a six-month month low in contraction era territory. property housing prices tumbling last month. just a lot of negative news they have to be digesting even though we saw these rallies last week. hong kong shares paring earlier gains. lizzy: it is not a negative story for hong kong shares of hsbc. they are higher after the bank posted second-quarter earnings with net interest margins beating estimates. the london-based bank which generates most of its income in asia announced another buyback

of up to $2 billion and saw pretax profits hitting $8.8 billion. we spoke to the hsbc ceo. take a listen. >> those results are a function of good revenue growth across the globe. all of our global businesses have strong revenue growth. all the product lines, strong revenue growth. also all geographies contributed to that performance. so i am pleased with the outcome. it is a $21.7 billion gb to which is 22.55%. i need to point out two notable items which boosted that return. underlying excluding those it is still a return on tangible equity of 18.5%. that is a very strong performance. our confidence is high on the future which is why we have changed our guidance going forward. we have increased it from the 12 plus guidance we had before to a

guidance of midteens for 2023 and 2024. i'm really pleased we were able to, because of our strong capital degeneration, commit to a further interim dividends for q2 and an additional up to $2 billion buyback which we intend to complete in the next three months. so that is a good outcome. but i do want to say it is broad-based across all geographies and across all business lines. >> from the outside it seems you are promoting and putting a lot of focus on india. is there a slight pivot away from china to focus on india? noel: no. we're looking to invest in all of asia. we see great opportunities in china and hong kong, but also we see opportunities within india and singapore. not just for singapore alone but singapore and its gateway into asean. we're investing equally into all

parts of asia and seeing good performance across the whole of asia. we are also investing in new business lines. i think in the past we have underinvested in our wealth business across asia. we had very good business in hong kong and invested in that. we did not invest enough in mainland done or singapore or india. we are correcting that now. you can see the evidence of that in these results. in asia we took in $27 billion in net new invested assets on behalf of our clients. if you look globally in the last 12 months are talking $75 billion of net new invested assets into our wealth business. that is a function of the investment row graham we started over two years ago. >> how active are you in helping to finance the belt and road projects? noel: we look at all those projects that are taking place, all the big infrastructure projects. we are focused on infrastructure

projects around sustainability. new hydrogen plants, wind and solar, wasted the carbonized. we are working with our clients across all of asia but globally we have done some big transactions as well in the middle east. we're looking to help clients invest in new technology to build a new greater economy of the future. we look at a project by project basis and some of them are within the belt and road initiative but some will be outside of that. many of them will be outside. >> how worried are you about chinese real estate? you announced today development could be worse than what you are expecting. would you have to take press charges against some of your exposure there? noel: what we announced today is we do a scenario on what a potential plausible downside could be on that. we are not predicting that.

we did take additional provisions in quarter two, but they were relatively manageable within our overall charge. we took about 300 million in the first half of this year on top of existing provisions. if a look at my overall pcl charge for the first half of the year it 1.3 billion and that absorbed commercial real estate in china. lizzy: that was hsbc cdl noel quinn following their second-quarter earnings beat. i want to pivot to u.s. banks. the latest fed survey says u.s. banks reported tighter standards and continued weak demand a new second-quarter extending a trend that began before recent stress in the sector. the proportion of banks tightening terms on commercial and industrial loans for bigger businesses rose to almost 51%. from 46% in the first quarter. let's get a look at what else is happening throughout the rest of today. at 10:00 a.m. u.k. time we will

get euro area unemployment data. at 3:00 p.m. u.s. jobs data comes out, expected to show further loosening in the labor market. later in the day we will be looking out for pfizer earnings. the covid vaccine is the biggest reason for a projected 51% plunge. and of course you will be looking forward to this. we are going to speak to the dhl group cfo melanie price after the logistics group reported a second quarter profit beat. that conversation, next. this is bloomberg. ♪

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suisse clients in the asia-pacific region. the bank intends to either wind down or selloff the majority of the more complex and high-risk structured loans in apac. the assets will be placed in the so-called non-core unit for businesses ubs does not want as it seeks to reduce risks after the merger with its swiss rival. staying with asian news, another indicator has confirmed china's factory output unexpectedly contracted in july while home sales dropped the most in a year. the much anticipated post-pandemic recovery of the world's second-largest economy appears to have flopped. our china senior executive john liu takes a deeper dive in this bloomberg originals report. john: this was supposed to be the year china's economy came roaring back. we had instead is signs the economy is struggling. john: when we talk about why the

economy is slowing, there are three things i would point to. one, there is a problem with the real estate markets here. the government identified there was a bubble in property about two or three years ago and started to take steps to try and deflate that bubble. now in 2023, you have seen a very dramatic drop in home prices. to the second point i would make about confidence. when those home prices fall, even if people are not earning less in terms of salary, they are feeling poor. the third thing i would point to his debt. there is way too much debt on the local level already and so the government is looking for new ways to get the economy going again. lizzy: that report from bloomberg's john liu in beijing. time now for your bloomberg big take today looks at the $32 trillion a year of global commerce. the way we are doing business

around the world is changing dramatically. you have u.s.-china tensions, the shift from fossil fuels, the rise of ai, all of them shaking up global trade. to discuss joining me now is malcolm scott. this takes me back to my days covering trade. you have been looking at the issues affecting trade through a lot of really interesting anecdotes. what are your major takeaways? malcolm: the big takeaway is even as the overall trade numbers do not necessarily show that globalization is dead, there is this rewiring going on beneath the surface suggesting change is afoot. in that change is coming and showing in things like greenfield investment numbers for new projects. it is showing up e-sports become busier at some junctures of the global economy and slower at others. and while that report has been busy with shoe leather reporting on the ground, bloomberg

economics team is busy with their calculators and computers as well. they showed that things like the chinese sales of tariff goods to the u.s. are down about $150 billion to where they would have been without those trump tariffs . looking at who is gaining from that, countries like mexico are plugging that gap. so naturally those ports at the u.s. border with mexico, truckers are struggling to keep up with demand. lizzy: so you have a big push to reduce supply chain reliance on china but asian is not standing still either. so what are they doing in this new era of confrontation? malcolm: firstly, they are not giving up the game. they remain a manufacturing superpower. indeed they are doubling down on the investment and trying to make sure they maintain that lead in the new industries. they gave their game away in the china 2025 report from 2015,

when they outlined a search egypt plan to dominate industries such as the -- they are pushing on with their plans and taking the competition to new frontiers. at the same time since around 2020, they have been talking about this dual circulation model is really a plan to increase the number of components for the manufacturers . the comport -- the proportion of components manufactured at home so china keeps more value added in that supply chain. it also boosts its domestic demand, its natural local markets, so that those big factories and sell more at home as well as still looking for those international sale. the third thing is, just like the rest of the world trying to diversify with from china, china

is trying to diversify its reliance from the big u.s. and european markets. it is selling more to southeast asian neighbors and elsewhere as well. lizzy: malcolm scott, it's an excellent big take. fantastic reporting. coming up, we are going to dig into one of the companies in the trade story. dhl group cfo joining us after the logistics group reported a second quarter profit beat. that interview, next. this is bloomberg. ♪

lizzy: welcome back to bloomberg daybreak: europe. dhl group has reported second-quarter beat estimates. they also raised the lower and of its four year guidance range.

joining us to discuss is the cfo melanie price. what is the main thing you want the market to take away from these earnings? melanie: good morning and thank you very much for having me. we are pleased with our earnings for the second quarter even though they are down compared to the second quarter of 2023 watch was an extraordinary quarter. the normalization of the earnings level is developing in line with what we had anticipated for the first half of the year. we now have ebit of 3.3 billion euros after the first six months and we have narrowed our guidance range for 2023 and increased the lower end to 6.2 billion. there is still a lot of uncertainty. that is why we have quite a wide range of our guidance but we are confident we will deliver between 6.2 billion euros and 7 billion euros for 2023. lizzy: we have seen a lot of

strike action. how much will that affect these results? melanie: i think the biggest area is the first half of the year. in germany we had intense negotiations with unions in the first quarter that led to some warning strikes and impacted our earnings in germany. we managed to reach a very expensive agreement. due to the current postal regulation we are not able to pass the rate increases onto our customers on the latter side. that puts some stress on the earnings development in the pmp division. so the good news is for us as a group, and that is why we changed the group name to dhl group, the absolute majority of our earnings, 90% of our revenues are generated under the dhl brand. the big income is no longer in post parcel germany but on the

international logistics side. that is where we are very pleased with the development for the first half of the year. lizzy: i appreciate the explanation. i also want to ask, is it fair to say that 2022 may be as good as it gets for dhl earnings? melanie: well, with our medium-term guidance we indicate that by 2025 we want to be back about 8 billion euros. but obviously the year 2023 is going to be a bit of a year of normalization, particularly in the forwarding business. when you look at where our revenue declined in the second quarter in the first of the year comes from, it's predominantly from global forwarding. where market circumstances were extraordinary in 2022, we still had significant capacity constraints on the air and the oceanside. at the same time, there were still some demand peaks that led to an extraordinary market environment.

it was obvious and to be expected that there would be a normalization. lizzy: macro wise, the german economy is stuck in a rut. are you seeing that in your business? melanie: i think across the board for germany, for europe, but also in other parts of the world, in the b-to-b volumes we see a lack of dynamic development. when you look at ocean freight volumes they were down 13%, 9%. what is encouraging also in the not so buoyant german economy is our parcel volumes are back in growth territory. germany grew by 8% in the second quarter. we also saw growth coming back in our e-commerce solutions volumes across europe. so it is a very mixed picture. clearly not dynamic on the b-to-b side. clearly still some sumer

reluctance on the be to seaside. but i think the post-covid normalization is done and we do expect also in line with a normal seasonal pattern some form of growth in the second half of the year. lizzy: we have also had a load of rate hikes, maybe more to come. do you think they will make the situation better, or is it a more intractable problem than that. melanie: sorry, can you repeat the first part of the question? lizzy: we have had a lot of different rate hikes from central banks around the world. we might get more in the pipeline. is that going to help the situation or is it a more intractable problem than that? melanie: i think we are all now expecting that the days when there were close to zero interest rates in the western world, that those days are gone, and we will all have to learn again to live with higher

interest rates. i think the general expectation is that the time of rapid increases is coming to an end. but obviously we will not get back to 0% to 2% interest rate levels in the near future. that is what everyone has to learn how to cope with. for us, that also means the cost inflation driven by these developments has to be passed on to our customers. we have a very strong focus on yield management and have done that very successfully. for us, it's really making sure that we keep costs under control, particularly given the low volume dynamics we see at the moment and that we then really work on the yield side. lizzy: very briefly here, do you have any layoff plans? melanie: well, we don't pride ourselves in making layoffs. if you make an announcement you

are laying off tens of thousands of people, you have not steered your business correctly enough. for us, tis' -- it's about making adjustments as necessary based on usual fluctuations in the workforce. we expected a market normalization since last summer and have cautiously made adjustments where necessary. but really in a very normal and socially compatible way. lizzy: all right. melanie kreis, thank you so much for joining me. still ahead, we speak to executives from bp and more. stay with us. this is bloomberg. ♪

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